Question: Pretzelmania, Inc., issues 6%, 10-year bonds with a face amount of $60,000 for $64,633 on January 1, 2012. The market interest rate for bonds of similar risk and maturity is 5%. Interest is paid annually on December 31.
1. Record the bond issue.
2. Record the first interest payment on December 31, 2012. (Interest expense is 5% times the carrying value of $64,633.)